GBP/USD Daily Price Forecast – GBPUSD Consolidates Around 1.27 Handle Ahead of a Busy Week
The GBP/USD was trading into 1.2750 in early hours of today’s trading session as it seems to have found support around 1.27 handle and is currently trading at 1.2763 down 0.07% on the day indicating signs of a consolidation move. Last week saw a full-scale return of risk aversion as contagion risks from Turkey to banking sectors throughout emerging markets and the European Union, sending traders piling back into the US Dollar as risk flows hit full-reverse. Meanwhile British pound is expected to continue seeing strong bearish sentiment especially against US Greenback as Bank of England Governor Mark Carney & Trade Secretary Liam Fox hinted at rising probability of a no-deal Brexit on the rise. At the same time as the no-deal scenario looks increasingly likely, calls for a new referendum are also gaining traction in the UK – and judging from betting markets, the implied odds of Britain actually exiting the EU by March 29 next year has fallen below 50%, in the aftermath of Carney and Fox’s comments.
Bearish Sentiment For GBP On Rise As Probability For No-Deal Brexit Scenario Increases
This development widens the potential outcome space of the Brexit-negotiation severely. Odds of a hard and sudden Brexit are on the rise and the chance of a new referendum or a material prolongation of the negotiation-process the same, while the likelihood of an orderly exit by March 29 seems to vanish by the day. This leaves a tricky scenario ahead for Bank of England, as they try to limit the downside in GBP due to inflation considerations. Monday’s economic calendar is devoid of data for the UK, and traders are going to be focused on Brexit headlines for the day as well as the new Turkey developments. But the week ahead looks highly active in UK’s market and Pound bulls are expected to remain focused on multiple first tier data updates which are scheduled to release in next three business days.
A look at technical chart shows signs of continued bearish approach despite, fundamental support providing multiple possibilities for bullish pullback. The pair has been on bearish decline for third consecutive week with no signs that could indicate downward exhaustion and technical indicators in daily chart maintain their strong downward slopes, with the RSI currently at 23. The pair presents a bearish stance in 4 hour chart as well, with the 20 SMA heading south around 1.2865 and the Momentum indicator consolidating in negative territory after a modest upward correction while the RSI indicator hovers around 24. Expected support and resistance for the pair are at 1.2720, 1.2680, 1.2645 and 1.2795, 1.2830, 1.2865 respectively.